UK hospitality and travel shares tumble after hints of second lockdown

British Airways owner down 11% as hospitality sector makes grim prediction for pubs and clubs

New “circuit-breaker” restrictions designed to prevent a second wave of Covid-19 in England would have “astronomical” consequences for struggling businesses unless they receive further financial support, the government has been warned.

Boris Johnson is weighing up short-term plans to close pubs and restaurants, while parts of the north of England and the Midlands are already facing 10pm curfews on nightlife and tighter restrictions on socialising from Tuesday.

As shares in airlines, hotel groups and pub chains fell, multiple trade bodies called on the government to clarify its plans and ensure firms are not cut adrift financially.

Hannah Essex, co-executive director of the British Chambers of Commerce (BCC), said: “Uncertainty and speculation around future national restrictions will sap business and consumer confidence at a delicate moment for the economy.

“While protection of public health must be the priority, government should do everything in its power to avoid further national lockdowns that will cripple businesses.

She said any requirement for firms to close or reduce capacity through no fault of their own should be accompanied by a “comprehensive support package”.

Expectations of new restrictions came after the health secretary, Matt Hancock, refused to rule out a two-week nationwide lockdown as the “last line of defence”, hitting shares in some of the UK’s biggest companies.

British Airways owner IAG was the biggest loser on the FTSE 100, down nearly 15%, while easyJet fell by 9% and the aircraft engine maker Rolls-Royce lost 5%.

Pub companies such as JD Wetherspoons and Mitchells & Butlers, along with hotels groups Intercontinental and Whitbread also lost ground, as traders were spooked by the threat of closures.

Shares in NatWest, formerly known as RBS, slipped below £1 for the first time since the pandemic took hold, while Lloyds Banking Group was down by 3%. Both are seen as proxies for the health of the UK economy.

The hospitality sector has been particularly hard hit by coronavirus prevention measures.

A quarter of licensed premises still yet to reopen after the first lockdown and firms have issued dire predictions about the effect of any new curbs.

UK Hospitality boss, Kate Nicholls, said the sector was “on a knife edge”. Unverified rumours about lockdowns and curfews was hitting consumer confidence, she added.

“If lockdowns or restrictions are needed, they need to be formulated carefully, and come with government support, to minimise the damage to business,” she said. “Even relatively minor tweaks like a business having to close at 10pm rather than 11pm has a huge impact.”

Her counterpart at the British Beer and Pubs Association, Emma Emma McClarkin, said: “As an industry we recognise the need to continue to support the government and local communities to manage the risk of rising infection rates. Pubs have been adapting to the ‘new normal’ over the past few months and will continue to do so, but pubs were struggling to break even before today and these latest restrictions may push some to breaking point.”

“The government needs to act fast in putting together a comprehensive support package to ensure that thousands of pubs don’t close their doors for good. We need a sector-specific furlough scheme to save the hundreds of thousands of jobs that pubs support, extended VAT cuts and business rates holiday and a substantial cut to the rate of beer duty.”

She added: “Shutting down completely even for a short period, would be a monumental task, severely impact livelihoods and would come at an astronomical cost to the trade.”

The BBPA is calling for an extension of the furlough scheme for hospitality firms, as well as an extension of the VAT cut, a business rates holiday and lower beer duty.

Michael Kill, the chief executive of the Night Time Industries Association (NTIA), urged ministers to be cautious about targeting hospitality firms, including struggling pubs, clubs and bars, with Covid-19 curbs.

“Curfews are devastating for our sector,” he said. “We are concerned about the narrative around hospitality being at partial blame for what’s going on. There have been schools and universities going back, illegal parties, households, that have all contributed in different ways.

“If we end at 10pm in the evening, we’ll end up with people looking for those additional hours, whether it’s an illegal event or continuing the party at a household.”

Analysts at the stockbroker IG said the possibility of London being included in lockdown restrictions had sharpened fears among investors.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

“While localised restrictions have become somewhat normalised of late, the economic importance of London means we are likely to see a more significant market reaction if the growth in cases leads to significant economic consequences,” said the senior market analyst Joshua Mahony.

“With the growing likeliness of quarantine restrictions being imposed on UK visitors, it comes as no surprise to see the likes of IAG, easyJet, Carnival, Rolls-Royce, and InterContinental Hotels Group heading up the FTSE 350 losers,” he added.


Rob Davies and Richard Partington

The GuardianTramp

Related Content

Article image
Travel firms drop £2bn in value after France added to UK Covid quarantine list
The British Airways owner, IAG, and struggling tourism group Tui among the fallers

Mark Sweney

14, Aug, 2020 @8:32 AM

Article image
Travel shares slide as Britons warned not to book foreign holidays
Holiday and aviation firms including IAG and easyJet are hit amid fears of another summer of lost bookings

Mark Sweney and Gwyn Topham

22, Mar, 2021 @10:16 AM

Article image
FTSE 100 hit by biggest fall since June 2020 amid new variant fears
Travel, aviation and oil stocks around world badly hit as worries deepen over effect of fresh Covid wave on global economy

Rob Davies and Mark Sweney

26, Nov, 2021 @5:31 PM

Article image
Nearly £2bn wiped off travel shares as Austria orders lockdown
Fears of restrictions in other European countries this winter knock airlines

Mark Sweney and Graeme Wearden

19, Nov, 2021 @5:16 PM

Article image
Aviation shares jump as relaxation of England’s Covid travel rules planned
BA’s owner IAG, Ryanair and Rolls-Royce buoyed as ministers plan changes for international trips

Mark Sweney

17, Sep, 2021 @12:52 PM

Article image
US and European markets dip as Covid containment efforts founder
Investors’ summer optimism gives way to insecurity as curfews and lockdowns return

Jasper Jolly

26, Oct, 2020 @8:12 PM

Article image
The UK airline industry should first ask their own shareholders for bailouts
Carriers such as IAG and easyJet have boasted of healthy cash balances – it’s the regional airports more worthy of Treasury help

Nils Pratley

24, Mar, 2020 @6:50 PM

Article image
Global markets: winners and losers as Covid vaccine hopes send shares surging
The news highlighted divergences in fortunes across sectors during the pandemic

Jasper Jolly

09, Nov, 2020 @7:57 PM

Article image
Brexit fallout – the business winners ... and losers
List of major UK companies which stand to benefit from EU referendum result and falling pound lengthens - as does the list of losers

Sean Farrell

11, Jul, 2016 @11:06 AM

Article image
What are the UK's new quarantine rules?
How will the 14-day quarantine work and why are Britain’s three biggest airlines challenging it?

Gwyn Topham Transport correspondent

08, Jun, 2020 @5:00 AM